Auto Buying Guide: Deciding whether to keep or sell your car

EDITOR’S NOTE: This article appears in Auto Buying Guide 2017. Find the full magazine at http://gatehouse.morecontentnow.com/article/20170316/NEWS/303159999.

You’ve had your car for a while and you’re at a crossroads. Maybe it’s purely financial, maybe it’s a question of maintenance, or maybe you’ve had a change in family status, but whatever the reason, you think your current vehicle isn’t cutting it any longer.So how do you decide when it’s time to pull the trigger on a new car?‘I Hate This Stupid Car’“I’m thinking about unloading my much-despised 2010 SUV,” my friend Julia wrote me a few months back. “It’s a vehicle I never would’ve chosen, but I let myself get strong-armed into it by an opportunistic and very talented salesman.” Not only was it unreliable, but Julia said she flat-out never liked it. “Not only is it totally uninspiring to drive, but has a really crappy interior layout and lousy visibility and nowhere near the room that I would have liked. I don’t even like the color,” she said.The Argument for Keeping ItThe biggest consideration for keeping a car you hate is financial. It’s almost guaranteed that you’re going to lose money in a transaction.According to Chron.com, a good rule of thumb is that your brand-new car will lose 10 percent of its value the moment you sign the paperwork, and another 10 by the end of the first year. Then, it will continue to lose 15 percent of its value per year.Factor in things like sales tax and more expensive insurance on a newer car, and getting yourself out of the car you hate can cost you thousands.The Argument for Cutting it LooseWell, you hate it. No matter how much money you’re going to lose, if you cringe every single time you write a check for your car payment, and you find yourself looking in the other direction to avoid seeing your car in a parking lot, nothing in the world is going to make it any better. Beyond basic transportation, your car should bring you some small bit of pleasure. If you can’t fix it with a new radio or a set of seat covers, something is drastically wrong with this relationship.The Final AnswerIf you’ll lose more money in therapist visits than you will on the transaction for a new car, get rid of that heap and get a car you love. Julia did. She’s now driving a certified pre-owned crossover that meets her needs and makes her happy.‘Gas Prices Have Gone Up $1.35’For the last couple of years we’ve been enjoying historically low gasoline prices, especially when adjusted for inflation. Recent data show that many Americans jump into the same ginormous SUVs and pickups that were nailed to the showroom floor in 2008, when we were paying close to four bucks a gallon for gas.You know as well as we do that gas prices are going to go up again, though, and as soon as they do, manufacturers will blow the dust off the EVs and hybrids languishing in showrooms, and charge a premium for anything that gets 50 miles per gallon-plus.The Argument for Keeping ItThe EPA makes this one pretty easy. If you navigate over to FuelEconomy.gov, there’s a handy cost calculator that will give you a pretty good estimate of your fuel cost savings per year, based on how many miles you drive.Let’s say you’re driving one of America’s most popular cars, the 2013 Toyota Camry with a V6, and you’re considering trading it on a 2017 Toyota Prius Three. At 15,000 miles per year, with gas prices set at a high $3.50 per gallon, you’d save about $1,100 per year in fuel costs.But what’s it going to cost to get into a Prius? A 2013 Camry V6 with average mileage is worth around $12,000. A 2017 Toyota Prius Three is $26,735. You’re spending $14,735 to save $1,100 a year in fuel, not including the sales tax, insurance, licensing fees and other associated costs with getting a new car. It would take 13 years to make up the difference in fuel cost between the Camry and the Prius.

The Argument for Getting Rid of ItNow let’s compare a 2013 Chevrolet Suburban with a 17 mpg combined average, versus a 2017 Toyota Prius, with a 52 mpg combined average. At a 15,000 mile per year average, with gas prices set at $3.50 per gallon, you’ll spend $2,100 more per year in fuel for the Suburban. Over five years, that’s $10,500. It’s a ton of money.How about what it’s going to cost to flip the Suburban? Average trade-in value for a loaded 4WD Suburban is $32,462. Average value for a 2017 Toyota Prius Three is $26,735. On a good day, you could walk out of a transaction like that with a check in your pocket, and a savings of $2,100 per year in fuel costs.The Final AnswerIt depends on the cars in question, the costs, the price of fuel and the market, but in general, swapping out an average car for a hybrid solely to save money in gas probably doesn’t make sense, while swapping out a true gas guzzler does.‘I Want To Get Rid of My Payments’Car payments — most people will tell you — are as inevitable as death and taxes. If you plan on living further than bicycling distance from where you work, you’ll need a car. That need ramps up when you add kids to the mix. And if you’re going to have a car, few can afford to buy one outright — ergo, car payments are a way of life.It doesn’t need to be that way, though. With some financial planning, you can pay cash for a car and get yourself out from under the inscrutable bootheel of the credit industry. One way to get out of a payment is to sell your current vehicle on which you owe money, and get into one that you can buy for cash.The Argument For Keeping ItTwo questions are going to make this decision easy: Do you have at least some equity in your current vehicle? Do you have a bit of cash to buy a decent, well-used automobile?If you’ve answered “no” to one or both of these questions, you’re probably better off riding it out with your current vehicle, and putting aside some money when the value of your vehicle exceeds the amount you owe on it.The Argument For Cutting It LooseIf you’ve answered yes to both, you’re on your way to a life without car payments. That doesn’t mean you won’t be spending money on your car: Maintenance costs money, and it costs more money the older a car gets. But you won’t be writing a check to the bank for the privilege of having a car any longer. The Final AnswerIf you can find a way to get yourself out of debt for your car, do it. It frees up your liquid cash for other things like vacations, dining out and replacing your water heater when it lets go all over your basement.‘My Transmission Went Belly Up’Two common misconceptions to clear up: One, transmissions rarely fail these days. Two, if it does, the car is junk. We talked to Jim Clapham, who owns Clapham’s Automatic Transmission Inc. in Fitchburg, Massachusetts. His father founded the business in 1951, and Jim started working alongside his father in the 1980s. “Every transmission will eventually fail under extreme conditions,” says Clapham.Deciding whether the investment in a rebuild or a replacement is worth it is dependent upon the cost of the repair and the value of the vehicle, with a few exceptions.The Argument for Keeping It“When a GM 6L80 or a Ford 6R140 transmission fails,” says Clapham, “it’s meant to be taken apart, rebuilt and put back into service.” That’s true of transmissions like the Honda H5 and H6 five- and six-speed transmissions, and many other automatic transmissions in popular vehicles. Replacement costs for a new transmission range from $2,500 to $4,500, consisting of a remanufactured transmission and four to nine hours of replacement time, at a rate between $450 and $850.Expensive? Yes. But have you priced a new car lately? What kind of a car can you buy for $4,500? What would it cost to replace the car you’re driving with a new model, especially if you’re trading a car with a junk transmission?

The Argument for Cutting it LooseInvesting $4,500 in a car that’s only worth $3,000 on its best day seems like a waste of resources. At that point, a car with a bum trans would only be worth $1,400 on the open market. But a dealer looking to make a sale may be willing to offer you a fair trade at a better price on a new car.There are also cars with transmissions that are notoriously difficult or expensive to replace. CVTs, for example, weren’t really meant to be rebuilt, just replaced, and it can get costly.The Final AnswerOn any vehicle that has retained a fair amount of its value, a transmission replacement is a good investment. If it’s able to extend the life of your vehicle by another six years, that $4,500 only amounts to $62 a month.